Three Republican senators introduced the Lawful Access to Encrypted Data Act of 2020 last week. The bill would grant law enforcement the power to access encrypted data held by tech companies. That inc
Three Republican senators introduced the Lawful Access to Encrypted Data Act of 2020 last week. The bill would grant law enforcement the power to access encrypted data held by tech companies. That includes encrypted messaging services, virtual currencies, and devices with encryption that keeps the government from reading stored information.
The impact reaches beyond Bitcoin. WhatsApp, Signal, and other encrypted messaging apps would face the same pressure. So would any smartphone, computer, or storage device larger than 1GB. Companies would need to provide law enforcement a method to decrypt their users' data whenever the government asks. Technologists worry that hackers would exploit these backdoors, making every device less secure.
The LAED act, in plain terms, bans any encrypted technology that blocks government oversight. It would outlaw the manufacture and sale of encrypted devices that law enforcement cannot access without the device holder's cooperation. Apply that standard to every smartphone, laptop, and cloud storage service, and the bill covers everything. For any product or service to operate in the US market, its creator must help law enforcement decrypt the data it holds whenever the government asks.
Cryptocurrencies like Bitcoin would create a regulatory nightmare under this framework. Bitcoin operates as a blockchain with no company running it and no board to oversee it. Law enforcement would have no single entity to demand backdoor access from because Bitcoin has no central authority. There is no person to regulate, no office to serve with a court order.
Bitcoin's transparent transaction flows and amounts help law enforcement investigate criminal activity. Bitcoin ownership remains difficult to determine because addresses don't require real names to generate. A user can route transactions through a VPN to obscure their location. These workarounds make it hard for authorities to build a defensible chain connecting Bitcoin movements to specific people.
The legislation would uproot the American cryptocurrency industry. Blockchain companies could flee to Singapore, where encryption requirements are less restrictive. Other nations would welcome crypto startups escaping American compliance costs. A US law cannot stop crypto innovation globally, but it can push the industry out of America. The result would be American blockchain talent and capital flowing to offshore jurisdictions while development continues unimpeded elsewhere.
